Revocation of Authority to carry on banking business
Banking Act 1959
SINCE
- on 6 October 2016 Intech Credit Union Limited ABN 70 087 650 191 (the ADI) applied in writing to APRA under subsection 9A(1) of the Banking Act 1959 (the Act), to revoke its authority to carry on banking business in Australia (the Authority); and
B. I am satisfied that revocation of the Authority:
(i) would not be contrary to the national interest; and
(ii) would not be contrary to the interests of the depositors of the ADI,
I, Keith Chapman, a delegate of APRA, under subsection 9A(1) of the Act, REVOKE the Authority.
Dated: 23 January 2017
[Signed]
Keith Chapman
Executive General Manager Specialised Institutions Division
Interpretation Document ID: 225762
In this Notice
APRA means the Australian Prudential Regulation Authority.
ADI is short for authorised deposit-taking institution and has the meaning given in subsection 5(1) of the Act.
banking business has the meaning given in subsection 5(1) of the Act.
Note 1
Under subsection 9A(5A) of the Act, the notice of revocation of the authority may state that the
authority continues in effect in relation to a specified matter or specified period, as though the revocation had not happened, for the purposes of a specified provision of the Act or the regulations, or a specified provision of another law of the Commonwealth that is administered by APRA, or a specified provision of the prudential standards, and the statement has effect accordingly.
Note 2
Under subsection 9A(6) of the Act, APRA must publish a copy of this Notice in the Gazette and
may cause notice of the revocation to be published in any other way it considers appropriate.
Note 3
Under subsection 8(1) of the Act, a body corporate is guilty of an offence if the body corporate
carries on banking business in Australia and the body corporate is not the Reserve Bank and the body corporate is not an ADI and there is no order in force under section 11 of the Act determining that subsection 8
(1) does not apply to the body corporate. A penalty of 200 penalty units applies or by virtue of subsection 4B
(3) of the Crimes Act 1914 in the case of a body corporate, a penalty not exceeding 1,000 penalty units. By virtue of subsection 8(2) of the Act, an offence against subsection 8(1) is an indictable offence. Under subsection 8(3) of the Act, if a body corporate commits an offence against subsection 8(1), the body corporate is guilty of an offence against that subsection in respect of the first day on which the offence is committed and each subsequent day (if any) on which the circumstances that gave rise to the body corporate committing the offence continue (including the day of conviction for any such offence or any later day).
Overview
The Banking Act 1959 was enacted to provide a framework for the regulation of banking activities in Australia, addressing the need for a structured approach to the oversight of banking institutions to ensure stability and protect depositors. This Act was introduced by the Commonwealth Parliament and is administered by the Australian Prudential Regulation Authority (APRA). The primary objective of the Act is to safeguard the interests of depositors and maintain the stability of the banking system by regulating the entities authorised to carry out banking business. The revocation of an institution's authority to conduct banking business, as evidenced by the revocation of Intech Credit Union Limited's authority on 6 October 2016, is one of the mechanisms employed by APRA under this Act to ensure compliance with these overarching policy objectives. This action was taken to prevent any potential threat to the national interest and the interests of depositors, as mandated by the Act.
Scope and Application
The Banking Act 1959 applies to authorised deposit-taking institutions (ADI) operating in Australia, and the revocation of the authority to carry on banking business pertains specifically to Intech Credit Union Limited. The Act's jurisdictional reach is national, with its provisions administered by the Australian Prudential Regulation Authority (APRA). The revocation of the Authority for Intech Credit Union Limited to carry on banking business in Australia was executed under subsection 9A(1) of the Act by a delegate of APRA, Keith Chapman, on 23 January 2017, following an application from Intech Credit Union Limited. The decision to revoke the Authority was made in accordance with subsection 9A(5A) of the Act, which allows for the revocation to have specified effects for certain provisions of the Act, regulations, or other laws administered by APRA. Furthermore, the Act stipulates that any body corporate carrying on banking business in Australia without the necessary authority is guilty of an offence, with penalties outlined in subsection 8(1) and subsection 4B(3) of the Crimes Act 1914.
Key Provisions
The Banking Act 1959, as referenced in the gazetted notice C2017G00097, includes provisions for the revocation of a banking institution's authority to operate in Australia. According to subsection 9A(1), an institution can apply to the Australian Prudential Regulation Authority (APRA) to revoke its banking authority. The gazetted notice indicates that Intech Credit Union Limited, identified by its ABN 70 087 650 191, made such an application. Following the application, Keith Chapman, a delegate of APRA, assessed the application under subsection 9A(1) and determined that revoking the institution's authority would not be against the national interest or the interests of the depositors. As such, Keith Chapman revoked the institution's authority to carry on banking business in Australia, effective from 6 October 2016.
The Banking Act 1959 imposes several obligations on parties governed by it. Under subsection 9A(5A), APRA has the authority to specify conditions under which the revoked authority may still apply for certain purposes, such as to allow for a smooth transition or to address legal requirements. Additionally, subsection 8(1) of the Act mandates that only the Reserve Bank, authorised deposit-taking institutions (ADIs), or entities exempt by a specific order, are allowed to carry on banking business in Australia. Subsection 8(3) further clarifies that any corporate body found to be operating banking business without the requisite authority commits an offence each day the illegal activity continues, from the initial day of the offence through to the day of conviction or beyond.
Failure to comply with the provisions of the Banking Act 1959 can result in significant consequences. According to subsection 8(1), any corporate body that carries on banking business without the appropriate authorisation commits an indictable offence. The penalty for such an offence is substantial, with a maximum fine of 1,000 penalty units, as stipulated in subsection 4B(3) of the Crimes Act 1914. This penalty reflects the seriousness of operating outside the legal framework designed to protect the financial system and its participants. Additionally, the Act requires APRA to publish a notice of revocation in the Gazette and may choose to disseminate the notice through other appropriate channels as outlined in subsection 9A(6). This transparency ensures that all stakeholders are informed about the changes in the authorised entities operating in the banking sector.